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Time to Get Naked?
Naked DSL provides broadband internet access without a telephone line – and without monthly line rental costs. But do the benefits outweigh the limitations? Matthew Backhouse asks David Farrar if Naked DSL is all it’s cracked up to be. It’s a familiar scenario. The bills arrive, seemingly all at once, and pile up into an ominous stack of debt. Power, phone, internet – they all add up. After days of denial and procrastination, you have to capitulate. But no matter how gracious your surrender, you can’t help wishing there was one less bill to pay. Just one. That dream may now become a reality for many New Zealanders. Amendments to the Telecommunications Act have required Telecom to unbundle its bitstream service, thereby opening up competition by allowing other providers to interconnect with Telecom’s fixed public data network at wholesale prices. Many providers see this as a stopgap measure until local loop unbundling is fully implemented, but there are already commercial applications. One offshoot is the availability of Naked DSL, which gives customers access to broadband internet without needing a telephone line. Slingshot, WorldxChange and KiwiLink already offer Naked DSL packages, while other ISPs, including Orcon and ihug, will launch their own Naked DSL services later in the year. Goodbye, phone bill. But is it really a matter of ditch the phone line, ditch the bill? David Farrar, Public Policy Chair of InternetNZ, a non-profit organisation dedicated to the development of the internet in New Zealand, says that internet users need to think carefully before ditching their landlines. “At the beginning, there won’t be many benefits to end users,” he says. “There will be some saving, but it won’t be the entire forty bucks a month for your phone rental, because some of the costs of maintaining the copper line will be incorporated into the Naked DSL price.” Just how much of those maintenance costs should be carried by internet providers has been a hotly debated issue. The Telecommunications Commissioner recently finalised the wholesale price for Naked DSL at $47.28 for urban areas, but the retail price that end users pay is likely to be greater. Slingshot’s Naked DSL service, for example, costs $79.95 a month, which is almost identical to what users currently pay for both a phone line and a reasonable broadband internet package. “I think you’ll see some competition bringing that price down, though” says Farrar. Slingshot’s Naked DSL service has other advantages; it is bundled with iTalk, a voice over IP (VoIP) service which enables subscribers to make cheap national and international calls over the internet. David Farrar says that the possibilities offered by VoIP calling might be more attractive to Naked DSL subscribers than any likely line rental savings. “The bigger potential is not going to come from people who say, ‘Hey, we can save by not having a home line rental’. It will come from being able to use Voice over IP to do more and more of the calls they have to pay for at the moment, because we’ve got free Voice over IP services like Skype.” Free calling is only available between two VoIP users; internet calls to landlines and mobile phones incur a charge. But Farrar points out that there are still savings to be made. “It’s about ten percent of what you’d pay for landline calls,” he says. “Most people spend a lot more on phone calls than they do on the actual line rental, and it’s the ability to pay much cheaper rates on your phone calls that I think will be the real saving.” However, there are some disadvantages to VoIP calling. “The bandwidth isn’t that good at the moment for Voice over IP,” says Farrar. “Until we get the copper loop shortened and we get better bandwidth, the technology has got some way to go in terms of sound quality. Having said that, Skype is actually pretty damned good.” Farrar says there will also be some users who aren’t too concerned about VoIP calling; they just want to ditch their landline. “There are a lot of people, especially younger New Zealanders, who just don’t use their landline,” he says. “They use their cellphone for everything. So they will probably give up their landline, save $250 a year and just use their cellphone.” Naked DSL is just one way to get broadband without a phone line. Farrar points out that wireless broadband is another option. “For parts of rural New Zealand, it’s the way of the future,” he says. “But it will never be quite as good as terrestrial broadband. The bandwidth will get quite good, but you’re always going to get a slightly better service through fiber and to a degree copper on the ground.” Farrar says that Naked DSL will probably be a better option than wireless for most users. Weighing up the costs and benefits of Naked DSL can be challenging, especially given how new the technology is. If you’re not sure that Naked DSL is for you, David Farrar suggests a ‘wait and see’ approach. Costs will come down, and customer feedback on the benefits and disadvantages of Naked DSL will come to light as the number of users grows. But if you really want to be one step ahead, or even if you just want one less bill in your mailbox every month, then Naked DSL might just be for you. Consider Naked DSL if: You don’t use your landline often You make a lot of toll calls You already use VoIP for most of your calling Hang onto your landline if: Broadband speeds are slow in your area You regularly use your landline for local calls You won’t be saving any money 
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